Freeport profit down 32%, to cut capital spending by $1.9bn
Freeport McMoRan Copper and Gold (NYSE: FCX) logged Tuesday a significant decline in second-quarter profit and announced a plan to cut $1.9 billion from its medium-term capital spending in light of declining metal prices.
The Arizona-based miner’s net income dropped 32% in the period to $482 million, compared to $710m, as a collapse in its flagship Grasberg mine in Indonesia, which killed 28 people and injured 10 others, curbed its copper and gold production.
The nearly two-months stoppage following the completion of a government probe into recent accidents at the mine, cost Freeport about 125 million pounds of copper and 125,000 ounces of gold in lost production for the quarter.
The copper giant now expects to sell 4.1 billion pounds of copper this year, a 5% decrease from its previous forecast, and 1.1 million ounces of gold, or 21% less than previously anticipated.
The company, which operates mines in the Americas, Asia and Africa, added it expects to cut total borrowings to $12 billion in the next three years.
The firm now anticipates that Grasberg, the world's largest gold and third-largest copper mine with a history that dates back to the 1930s, will produce just 80% of its 2013 targeted output of 500,000 tonnes of copper, and 1.25 million ounces of gold. The mine also produces silver.
Together with declining commodity prices and accidents, Freeport has also been hit by a series of labour disputes in recent years, including a three-month strike in late 2011 and smaller problems since.